Good day ladies and gentlemen and welcome to CenturyTel's First Quarter 2008 Earnings Conference Call. At this time all participants are in a listen-only mode, later we will conduct the question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a remainder this conference all is being recorded. I would now like to turn conference over to Mr. Tony Davis, Vice President of Investor Relations. Mr. Davis you may begin.

Thank you, Saed. Good morning everyone and welcome to our call today to discuss CenturyTel's first quarter 2008 earning results released earlier this morning. During today's call we will refer to certain non-GAAP financial measures and we have reconciled these measures to GAAP figures in our earrings release which is available on our website at www.centurytel.com. Your host for today's call is Glen Post, Chairman and Chief Executive Officer of CenturyTel and joining Glen on the call is Stewart Ewing, CenturyTel's Executive Vice President and Chief Financial Officer. Also available during the call today is Karen Puckett, CenturyTel's President and Chief Operating Officer. We will be making certain forward-looking statements today, particularly as they pertain to guidance for second quarter and full year 2008, selected information regarding 2007 and 2008 and other outlooks in our business. Please review our Safe Harbor language found in our press release and in our SEC fillings which describe factors that could cause our actual results to different materially from those projected by us in our forward-looking statements. Our call today will be accessible for telephone replay through May 7th, 2008 and accessible for webcast replay through May 21, 2008. For anyone listening to a taped or webcast replay of this call or for anyone reviewing a written transcript of today's call, please note that all information presented is current only as of May 1st, 2008 and should be considered valid only as of that date regardless of the date listened to or reviewed. At this time I'll turn the call over to your host today, Glen Post. Glen?

Thank you, Tony. Appreciate you joining us today as we discuss CenturyTel's first quarter 2008 operating results and our guidance for the second quarter and full year 2008. Diluted earnings per share excluding non-recurring items was $0.81 for the quarter or $0.08 ahead of the upper end of our previous guidance of First Call consensus of $0.73. The $0.81 diluted earnings per share represents an increase of more than 19% compared to the first quarter of 2007. Now, this increase was driven by the contribution of the Madison River properties to our overall business, to continued success in controlling cost, a moderately lower effective income tax rate and 8% decline in average diluted shares outstanding. Operating revenues for the quarter was $648.6 million which was within our previous revenue guidance of $646 million to $656 million. We continue to see strong demands for broadband services during the first quarter as we achieved 32.2% growth in data revenues over the first quarter of 2007, that percent will be 18.3% growth excluding Madison River properties. Now, this increase is primarily driven by the addition of nearly 115,000 high-speed Internet subscribers, nearly 28% growth, over the last 12 months excluding Madison River, including Madison River acquisition that will be nearly 42% growth in Internet field. The growth in data revenues and the revenue contribution of the Madison River properties during the quarter more than offset anticipated revenue reductions attributable to the access line decline and lower access revenues. We also generated strong free cash flow of more than $167 million during the quarter, while investing approximately 12% more in capital improvements than in the first quarter of 2007. We added more than 30,000 high-speed Internet customers during the first quarter which attributed 5.5% sequential growth in broadband customers. We ended the first quarter…

Thank you, Glen. During the next few minutes I'll cover some highlights from our first quarter 2008 operating results and briefly discuss CenturyTel's capital structure and liquidity. I'll then spend a few minutes discussing our second quarter and full year 2008 guidance provided in our earnings release issued earlier today. As a remainder all comments regarding the actual results for first quarter 2008 exclude the non-recurring items detailed on the financial schedules accompanying the press release. To give you a little more color on why our results exceeded the guidance we gave earlier for the first quarter, there were three primary items. The first is lower than expected or anticipated marketing expenses and other expense reductions due to the Madison River integration, vacant positions and cost containment efforts contributed about $0.06, below the line items related to our investment in the sale of partnership and certain life insurance policies contributed about $0.02. And the impact of revising our long term incentive compensation from a mix of restricted stock and options to 100% restricted stock and the related favorable accounting treatment for expense recognition of that also contributed about $0.02 to the amount that we exceeded the guidance that we gave you earlier with respect to the first quarter. For first quarter 2008, operating revenues increased 7.9% to $648.6 million from $600.9 million in first quarter 2007. This increase was primarily due to the $48 million revenues contributed by the Madison River properties. Excluding the revenue contribution by the Madison River properties, operating revenues were in line with the same quarter a year ago. Voice revenues for first quarter 2008 were $220.5 million versus $211.9 million in first quarter 2007. This 4.1% increase in voice revenues was primarily driven by voice revenues from Madison River properties and growth in long distance…

Thank you, sir. [Operator Instructions]. First question comes from Mike McCormack.

Hey guys, thanks for taking the call. Just coming on SG&A, if you will, for the quarter, obviously a good step down sequentially, the drivers there and also your expectation for the balance of the year to have some downward pressure and expense to be great? And then secondly, the access line guidance, current quarter you guys... the absolute number of line losses up a bit year-over-year, the guidance then implies that the next three quarters you are going to be down on an absolute basis, just give us your comfort level on that guidance, that would be great? Thanks.

Mike, first on the SG&A, a little less then $3 million of it. The decline was related to the settlement that I mentioned with one of carrier... customers of their receivable accounts, so that was about $3 million of it. Another $2 million or so related to our marketing expenses being a little lower this year then they were in first quarter a year ago.

What was, Stewart, the cause for the step down in marketing?

Basically just a little lower expenses, I'm mean they are really focused on broadband this quarter and we didn't focus on some of the items that we focused on first quarter, last year, related to some of the other products.

And the balance of the year you're expecting expenses to come down a bit, what's the driver for that?

We actually expect marketing expenses to come back up some in the second quarter and be higher in the second quarter than they were in the first quarter. And of course the settlement that we had, a little less than $3 million again, which was positive to the first quarter bad debt expense, will not reoccur in the second quarter.

And I guess, I was looking the commentary about expectation for expenses for the remainder of the year to be lower than we anticipated originally, what was the thought there?

It's basically... it's more employee expense related. It's said that it is anything else... our folks are doing a very good job of controlling expenses not filling vacancies, when they have vacancies so that really what most of it relates to.

Okay.

It also relates to a certain extent a little bit better performance from the standpoint of and lower cost associated with our Internet drain expense going forward and a little bit lower long distance expense per cost for that product than we anticipated 3 months ago.

Okay. And kindly can you make comments on the access lines?

Mike, I will start, Karen follows up [ph]. As far as guidance is concerned we have stated 4.5% to 6% line losses for the year. But in our guidance we have... at the upper end towards the 6% level as far as the guidance we are giving an impact of access line losses.

This is Karen. We are feeling pretty encouraged by what we are seeing. As Glen said, we've spent a lot of time and effort on expanding our distribution focus there. From a residential standpoint if you look year-over-year, we actually see improvement in the trends, which is incredibly encouraging for us. I mean we look at the business losses, basically we have some customers that are so customers that migrate from Centrex to IP, CPE. So still the customers they just don't have the Centrex. We don't count them on the access line. But they do have a product, product that of ours and then we reconfigure some of ours networks on admin and then our actual payphone. So when you look year-over-year you can net out the company lines, the payphone and we have that paging system that we shut down up in the Midwest. So basically flat, so very encouraging.

Great, thanks a lot guys.

Our next question comes from David Barden.

Hey, guys thanks. Just a little more cleaning up on some of the numbers Stewart just I think I heard you say that there was some directory settlements in the revenue lying in the other category, if you get just a quick touch on that? And then you are talking about guidance not including non-recurring items but it sounds like the 647 to 657 does include a non-recurring $4 million item, which would then imply, fairly sizable sequential steps on the revenue on a recurring basis, so just like to get some color on that. And then the guidance includes, buybacks as of April, I guess we have the number as of March, could you give us the month of April buyback that would be helpful as well thank you very much?

Yes, David, first of all, yes the guidance does include $4 million of settlements that we expect to look in the second quarter. So it does reflect a revenue step down, for the remainder of the year, and that's basically due to the expectation of lower intrastate access revenues, and continued access line losses. So, that's really what that relates to, but again the $4 million is in the guidance, and we don't camp that or we don't include that as a non-recurring item because we have, we typically have settlements like this from time-to-time. Our direct resettlements in the revenue line in the other category in 2007... now, first quarter 2007, we actually had a settlement of about $2.5 million. So that's what that relates to. David, as far as April buybacks, we bought back about 1.1 million shares, about $45 million in the month of April.

Alright thanks so much if I could just follow up your quick, Karen, you talked about the issue of churn versus gross debt and obviously a lot of the carriers with the housing market the way it is, have kind of also talked about pressures in gross adds with respect to line losses. If you see net improvement in there, are you saying that you are seeing kind of the net improvement on the churn reduction side as opposed to the gross debt side from a line perspective?

Actually, our inwards are still down on residential, but they are improving. It's not as the trends are improving and of course we are improving on the outs. We spent a lot of time on refining our save disc process and retention efforts on the program. So, again very encouraged in what we are seeing on the residential side.

Alright great guys. Thanks so much.

Our next question comes from Jason Armstrong.

Hi thanks Good morning. Couple of questions maybe just tying together the numbers to follow-up on David's question, so just beating the quarter by about $0.07 share repurchases that you've done so far this year, that's another $0.05 or $0.06 and then it sounds like the revenue settlement is somewhere in the order of $0.03 for the 2Q guidance... kind up adds up to $0.15 right there, which is what you took the low end of guidance up by maybe just... is number one is that correct? Number two, if you look forward, doesn't sound like you are implying that much of the improvement from 1Q sort of carries on for the rest of the year and there is no real core guidance like. So may be just touch to the logic there? And then second question I guess more strategic, realized you said in the next few months, will come back to us on wireless, but maybe just some initial comments on... I think you mentioned in the context of data is this sort of thought of as an extension of the DSL footprint, may be you take WiMAX or LTE to the 10%, 15% you can't get to or is this something you would really consider overlaying across most of the territory? Thanks.

Hey, I'll talk about the last question, ask Stewart to answer the question on the numbers. Basically we believe of course our future will be driven by broadband, both fixed line and wireless, and our participation at 700MHz, our auction is primarily about enhancing our existing broadband and voice product offerings in our current market area. We believe deployment of broadband and voice services over this spectrum will significantly enhance the competitiveness of our products. It was not just to reach those we haven't reached already, it's really to enhance... bringing the wireless broadband products to our customers. That's essentially our strategy with 700MHz is not separate apart from any existing business and we do not envision it as a me-too wireless type service. We believe coupling our fixed broadband and voice services with mobility of the wireless offerings will give us a strategic advantage over most of our competitors. And we also have... we also believe we'll have opportunity to deploy services in select contiguous market that we do not have service in today and well our not a territory focused, our work is not a primary focus. We do believe there will be opportunities to leverage our existing assets to deploy services in new markets on a selected basis.

Hey, Jason in the terms of the reconciliation do you got it own pretty much the pieces that you are missing or basically expense reductions and then as I mentioned in the comments that the positive were really offset by our expectation of a lower intrastate access revenue. So, you pretty much having it, I think.

Okay, great. Thanks again.

Our next question comes from Gaurav Jaitly.

Hey thanks, good morning guys. Sort of a follow-up on that last question, Glen, so it sounds like you are saying the spectrum purchase is primarily a broadband extension strategy? You obviously bought a lot of spectrum out of region, so just wondering what your thoughts were, sort of make sure that was right, if you just making broadband, WiFi, WiMAX kind of strategy, and then secondly Karen just wanted to follow-up on that access line from a housekeeping prospective view typically give out the primary, second and the business line breakdown and then just your thoughts on the economy any impact that might be having on the business, thanks?

Yes, for every year the focus that it is broadband extension primarily and overlaying the broadband, the wireless broadband, although we think to the extent we can bring wireless voice to our customers integrated with fixed-based product. It will be a positive for us over time. As far as, our territory... the other territory we would be looking at, it will be contagious markets. Markets where we have the fiber transport facilities, the fiber rings that we could utilize to leverage whatever we are able to... any services we bring with the 700 MHz with these other markets. Also we think there will be opportunities to swap spectrum or partner with other companies to enable us to get more coverage on our wireline areas while swapping some of the non-strategic areas that we have as far as the special coverage is concerned.

On the let me start the economy first. I would say in general there are obviously pocket within the states we do business or within the communities that have been impacted. But on a broadband it is... we don't see that impact our disconnect non-pays. They are not up, so what we see, we may see some flowness in just small businesses starting up. In terms of the access lines when you look at the kind of year-over-year acceleration or deceleration, residential in general had improved, the trends improved over 1,300, really made up as a large improvement and residential primary improved over 2,000. We did see some slow down in the second line, but again that is together we had a positive trend comparison on residential. On the business side, we did see an increase of about 2500, 65% of that was made up of what I went through before. The customer migrating a product set from centric to an IP, CPE where they would purchase PRIs, and then the remaining we had a bit of an increase in SOHO ports to competition cables. They did, they seem to be focused more on SOHO businesses as well as a softness in inwards on SOHO.

Great thanks.

Our next question comes from Simon Flannery.

Okay thanks, good morning. Got a question on user free cash flow, I think Glenn you sort of reiterated your commitment to fully complete the buy back program. Can you talk about the M&A environment, seems like Madison Rivers is going pretty well. Are there other things out there that are looking interesting, and Stewart have you had a chance to sort of work though the impact of the accelerated depreciation under the tax stimulus, package and to what its done, perhaps sort of enhances this year's cash flow? Thanks

Yes, Simon, first of all we are committed to completing the buyback program that we have in place and we continue to seek attractive acquisition. I believe we can try out long term shareholder value. There is a lot of talk as usual, nothing major on our plate today but we continue to look for those opportunities, we think there are these types of acquisitions can drive long term shareholder.

And Simon we've not had an opportunity to work through any cash flow impact that we get associated with the accelerated depreciation from the stimulus package

Okay thank you.

Our next question comes from Frank Louthan.

Great, thank you. Couple of questions on the 700MHz just to go back on that strategy a bit... are you... I here you talking about data, would you consider or are you considering at all using that spectrum for wireless local loops, trying to decrease the cost of your local plan for some of the farther outs lives and on the regulatory side, some chat over Washington regarding USF cap. Will that have any impact on you, I know its primarily aimed at the wireless CTCs, but would capping the fund have any impact to you or you still expecting to the normal trend we have seen in the last couple of years that contribution has trended down.

Frank, my answer to your first question on 700MHz, yes we will consider this spectrum to reach customers, so we can today get through the day is something, as far as the local loops concerned, if you're probably aware that this spectrum is extremely efficient in a less densely populated areas. So, we are using it for to reach customer there that we actually can't today, as well as providing enhancements to those we have who want wireless broadband, the wireless broadband capabilities this spectrum bring is a very efficient spectrum for us. And regarding the US sales for the... there's no direct impact on us, they indirectly takes pressure of the fund, long term makes it more valuable, so we are pleased to see the caps, but this has no direct impact on us really.

Okay, great. And then, going forward, just looking at trends with access lines declines so forth you have done a good job of maintaining revenue and EBITDA. Can you give us an idea, maybe of what sort of your, how much have you changed in your cost structure, you tend to cut cost, what percentage of your costs now are variable versus fixed, and how that trend might up see going forward as you continue to loose lines you can continue with the offsetting cost cutting you have been able to do over the last few years.

You know, frankly, it is difficult to say, just how much is fixed. Some times semi fixed with true variable costs. Bottom-line, we do believe there's more room to cut costs in certain areas, as access still down and we tend to look at those. We hope that attrition will take care of most of those, issues forced over time. Our folks are doing a great job of controlling cost and continue to maintain good margins right now. So we are hopefully continue in that direction, but there are certainly ways to reduce cost if there are significant declines in access lines or related revenues overtime.

Okay, great. Thank you.

Our next question comes from Jonathon Chaplin.

I am wondering if I could follow up on one of the earlier questions, just on the access [ph] line trends. It sounds like [inaudible] has been doing better, both on inwards and outwards. I wonder if you can characterize what the impact is from an improving macro environment or if indeed there is a... you are seeing anything in terms of an improving macro environment versus your own efforts to improve inwards through marketing and outwards through churn reduction initiatives. And then we heard from a couple of carries, actually it has been a fairly common theme that they saw pressures on accesses lines and other matrix peak in February and then improve sequentially in both March and April. I am wondering if you have seed a similar trend? Thanks.

I would say Jonathan, its directly linked to our effort on distribution expansion on marketing initiative our local presence, all the work that we have done here in the last 8 months are paying off and we have more plans and in terms of just trends in the last couple of months, I would say that they are consistent with what we have been seeing in this category.

Thanks Karen.

Our next question comes from Chris Larsen.

Hi, thanks most of my question has been answered. Just, the tax rate was a it little light in the first quarter, wondered if the expectation for 2008 is forward to trend backup to the regular rate. And secondly, I wondered if you could just give us an update on where the cable voice overlap is across your market, what percent are you seeing in terms of competition there? Thanks.

The tax rate is a little lower than last year because of a little bit lower or state affected tax rate. But it is in line with what we expect the effective tax rate to be for the year.

Chris, our cable VoIP overlap, we think is in the... somewhere in the 40% to 45% range today.

Thank you.

Our next question comes from Michael Rollins.

Hi, good morning. Just curious, if you could detail a little bit more, where you are in terms of dollars with the merger synergies for Madison River and what's left to complete, and how much saving that could bring to table, thanks.

Yeah Mike, we had a run rate at the end of... as of the end of March, our run rate's about $14 million. And if I recall from the end of the year, I think that's up from about $11 million run rate that we experienced in the end of the year. We still expect to be able to get run rate on net basis of $17 million. Our growth synergies, before we... before you deduct the revenue that we lose because of the regulatory process and the approving process that we have in Summer County, will actually be closer to $25 million. But again we do expect to get $17 million of synergies that we initially thought we would be able to get and we should see that continue roll and as we convert the last properties to our billing systems, which we expect to have done some time during second quarter.

Is there any potential to bring that number up over time or those things that you are looking at or exploring to try to get even more savings out of the combined Company?

You know, just over time, we will be able, just because of the volume that we have in terms of our high speed internet customers, we will be able to get, and have been able to negotiate lower Internet drain cost because most all of these properties are our own fiber networks, we are able to contain our back haul costs going forward. So I definitely believe that there are additional synergies that we will see down the road, if nothing more than from the stand point of being able to hold the line on the calls associated with Transport.

Thank you, very much.

While providing our customers with more bandwidth.

Thank you.

Our next question comes from Tom Seitz.

Thanks for taking the question. Do you expect any impact at all to the pace of the share buyback, with respect to paying for the spectrum? I think you guys tapped the revolver, is paying that down more of a priority than the share buyback, and then secondly, I may have missed this, and I apologize if I did, but I heard you talk on quite a bit about the satellite net-adds. I didn't hear you saying much about the switched digital video test that you have been doing. Just sort of any update on your thoughts and what's going on with the test there, thanks.

First of all, Tom, we don't expect any significant impact on the buyback. As far as the 700MHz Spectrum acquisition, we actually expect to complete ahead of the buyback sale. Regarding the satellite TV, what we have done on IPTV; with IPTV continue to be encouraged by our IPTV efforts, although they have not being without their technical challenges at times. We are seeing strong demand for an alternative cable TV in our markets, particularly among our bundled customers and our bundle products and offerings. We are seeing price improvements and equipment costs as other telecom deploy this equipment and we will assume those will continue to decline over the next couple of years. Our focus this year will be primarily on growing our customer's base in LaCrosse in Colombia, on improving our operational efficiencies and they are really stabilizing for the service calling it overall we remain optimistic about the future, about the key service services in this market.

You don't have to tell me where, but are there any other launches that you might consider and comparatively speaking which technology platform do you think shows the most promise for you guys?

Well the answer is yes, we will be looking at the other markets, although we have to be careful because the density is such a big issue when you are talking IPTV real well. We are still evaluating the technology, we believe the VDSL technology, VDSL too is primarily what we are utilizing in months ahead.

Okay, thank you very much.

Our next question comes from Michael Nelson.

Thanks a lot to taking the question. I was wondering what kind of acreage you are seeing from your 10 mega bit DSL product and what percent of your access lines does it cover currently and what are your plans to boost speeds across your footprints, thanks.

Our10 meg offering covers with the Madison River addition, it's about 64% of our access lines foot prints. It has a 10 meg or and that is a 10 meg offering and really what we see is more of a migration than new [inaudible] we've been successful and we believe we will continues to accelerate getting customers migrated from lower speed to higher speed. Right now it is about 10% of our internet service for DSL. We are still growing there.

And any plans to expand that across additional part of your footprint?

Yeah, we will continue to expand as we have a bonding capability in such. We have progressed with a good network fiber to our nose and then, we have a capital look at doing bonding here at the end of the year, first of next year.

Great, thank you.

Our final question comes from Chris King.

Hi good afternoon. Two quick questions, for you. First of all just was wondering, in any of your 69 license areas with the spectrum, whether there are any significant build out, the requirements over the course of the next year or two, do we need to be thinking about there. And secondly in terms of your high speed date of product, you guys obviously continued to do very well. With that we have heard from some of the cable companies that they have focusing on increasing their marketing efforts over the course of the last quarter or so and they seem to be seeing some nice traction on the HSD side as well. Just was wondering, if you were seeing any thing specifically out in your markets with respect to any new cable marketing efforts or promotional activity on the high speed data side. Thanks.

Chris, as far as the 700MHz, build out requirement, we have no special build out requirement in any of our market today. So nothing significant will happen in 2008. The spectrum of course to be cleared in 2009, and we will be making our decision over the next several months as far as to what we have bid out first, and how much and when basically.

Chris this is Karen on the high speed offer from cable what we would say is that we haven't seen a lot of change in our fourth quarter and certainly still in the first quarter the cable competitors seem to be more focused on a double play as opposed to triple play, reducing that they are trying to increase their effectiveness there but we are very pleased with our inwards and our flow share on the high speed side and be able to see. I think we will be successful there are in '08?.

Thank you.

This concludes our question and answer session for today. I will now like to turn the conference back over to Mr. Glen Post for any closing remark.

Thank you, in closing our strong financial results and cash flows in the first quarter provide into CenturyTel a solid start for 2008. We believe our initiatives that are under way to drive inbound sales activity and improve our retention capability will continue to gain traction during the remainder of the year and help drive our performance. We are also exited about the potential that 700Mhz spectrum provides us to develop in all for our customers differentiate services bundles over time. We also believe our strong cash flow and assertive or balance cap structure the position centric well to drive share holder value over the long term. We appreciate your participating in our call today and we look forward to speaking with you in the weeks and month ahead.

Ladies and gentlemen thank you participating into this conference. This concludes our program for today. You may all disconnect and have a nice day. Thank you.